Friday, July 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher in overnight trading. The U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Traders are weighing better-than-expected corporate earnings reports, especially from the big high tech companies, against a stunning drop in U.S. GDP in the second quarter and rising Covid-19 infections in the U.S. Also, Fed Chairman Powell said this week that recent U.S. economic data points to a slowing pace of the recovery. Don’t be surprised on this last trading day of the week and of the month if the latter few of the just-mentioned elements come more into play and the U.S. stock indexes come under selling pressure as the U.S. trading session progresses.
Gold prices surged to another record high overnight, at $1,981.80, basis August Comex futures. Gold and silver traders are apparently more concerned about the state of the world economies and geopolitics than are stock market traders. And there’s an old markets adage that the smartest traders are bond traders. U.S. Treasury bond yields this week have moved to near record lows, on safe-haven demand and a flight to quality. The yield on the benchmark U.S. Treasury 10-year note is currently trading around the 0.53% level.
In overnight news, China released more upbeat economic data from its purchasing managers. China’s economy is posting a solid recovery from the Pandemic lockdowns, if one is to fully accept the accuracy of China’s data.
The important outside markets today see Nymex crude oil prices a bit firmer and trading around $40.00 a barrel. The crude oil market bulls have seen their price uptrend on the daily chart stall out. The U.S. dollar index is a lower and hit another nearly two-year low overnight.
U.S. economic data due for release Friday includes personal income and outlays, the employment cost index, the ISM-Chicago business survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a 4.5-month-old price uptrend in place. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,273.75 and then at the July high of 3,284.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,195.00 and then at 3,175.00. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading. Bulls remain in firm overall technical control. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 11,000.50 and then at the July high of 11,058.50. On the downside, shorter-term support is seen at 10,650.00 and then at 10,500. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher and hit a nearly five-month high in early U.S. trading. Bulls have the solid near-term chart advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 182 26/32 and then at 183 even. Shorter-term support lies at the overnight low of 182 4/32 and then at Thursday’s low of 181 10/32. Wyckoff’s Intra-Day Market Rating: 6.5
September U.S. T-Notes: Prices are higher and hit another contract high in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight contract high of 140.06.0 and then at 140.12.0. Shorter-term technical support lies at the overnight low of 139.31.0 and then at Thursday’s low of 139.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
EURO CURRENCY
The September Euro currency futures are firmer and hit a nearly two-year high overnight. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1919 and then at 1.1950. Shorter-term support is seen at 1.1800 and then at Thursday’s low of 1.1742. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly up in early U.S. trading. A gentle price uptrend on the daily chart has stalled out. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $40.55 and then at $41.00. Look for sell stops just below technical support at $39.00 and then at this week’s low of $38.72. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are firmer in early U.S. pre-market trading, on short covering. The slumping U.S. dollar index is bullish for the grain markets, making U.S. grains more competitive on the world markets. Still bearish is non-threatening U.S. weather in the Corn Belt. Corn remains the weak sister of the grain markets, and remember the old market saying, “corn is king.”
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff